Opinion

The Three M’s: Milosevic, Mugabe, And Maduro

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By Steve H. Hanke ||

What do Slobodan Milosevic, Robert Mugabe, and Nicolás Maduro have in common? Other than being leaders who kept the Communist Manifesto at their bedside, all three ushered in devastating hyperinflations.

Hyperinflations are rare. They have only occurred when the supply of money has been governed by discretionary paper money standards.

No hyperinflation has ever been recorded when money has been commodity-based or when paper money has been convertible into a commodity.

The first hyperinflation occurred during the French Revolution (1789-96) when the mandat collapsed and the monthly inflation rate peaked at 143% in December of 1795.

More than a century elapsed before another episode of hyperinflation occurred.

Not coincidentally, this period of currency tranquility occurred during the heyday of the gold standard. With the emergence and adoption of fiat currencies, the 20th century ushered in currency instability and inflation. Indeed, since 1900 there have been 57 episodes of hyperinflation.

And, five of those episodes can be claimed by Yugoslavia, Zimbabwe, and Venezuela. All are featured in the Hanke-Krus World Hyperinflation Table below, which first appeared in The Routledge Handbook of Major Events in Economic History (2013).

The Hanke-Krus World Hyperinflation Table (abbreviated) PROF. STEVE H. HANKE

Milosevic and Yugoslavia:

Slobodan Milosevic was in the saddle when inflation last gutted the rump Yugoslavia. The first of his many monetary shenanigans was uncovered on January 7, 1991, when I served as an adviser in the Ante Marković reform government.

It was then that we discovered on December 28, 1990, the Milosevic-controlled Serbian Parliament had secretly ordered the Serbian National Bank (a regional central bank) to issue some $1.4 billion in credits to friends of Milosevic.

That illegal plunder equaled more than half of all the new money the National Bank of Yugoslavia had planned to emit in 1991. The heist sabotaged the Markovic government’s teetering plans for economic reform and hardened the resolve of leaders in Croatia and Slovenia to break away from Belgrade.

Without the Croats and Slovenes to fleece, Milosevic turned on his own people with a vengeance. Starting in January 1992, what was left of Yugoslavia endured what was at the time the second-highest hyperinflation in world history.

It peaked in January 1994, when I measured the monthly inflation rate at 313,000,000%. The Yugoslav hyperinflation episode lasted 24 long months. Nonetheless, Milosevic retained his grip on what was left of Yugoslavia for another six years.


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